Sparks fly over Bell Atlantic's cable bill

ANNAPOLIS -- Bell Atlantic Corp. and the cable industry yesterday dueled over the contentious issue of who will be taxed when and how in the coming telecommunications free-for-all.

The Philadelphia-based phone company, supported by Maryland's county and municipal governments, told members of the House Ways & Means Committee that its proposed video programming excise tax was a good-faith attempt to restore franchise-fee revenue that could be lost to local authorities when Bell Atlantic's proposed "video dial tone" services start eating into cable TV revenues.

But cable industry representatives countered that the bill Bell Atlantic drafted was actually a clever ruse to avoid franchise obligations while crafting tax advantages for itself.

"This is the first time I can remember a big business coming in and saying, 'Tax me,' " said former state Sen. Laurence Levitan, who now represents the cable industry. "So you've really got to look at what's going on."

By the time the last lobbyist had spoken, legislators seemed inclined to punt the complex issue into a summer study session -- a tactical victory for cable advocates, who had sought a delay.

"I think we were kind of concerned that too much was happening too quick," said Del. James W. Campbell, the Baltimore Democrat who chairs the Ways and Means subcommittee that will consider the flurry of amendments offered to the bill.

Legislators also heard from representatives of the broadcast satellite industry and their customers, who decried the attempt to include their services in the tax bill.

The central issue in yesterday's hearing involved the 5 percent excise tax Bell Atlantic is proposing to impose on its own video dial tone service. That service, which will offer programs much like today's cable TV plus advanced interactive services, is expected to pose a stiff challenge to incumbent cable operators.

Sean Looney, Bell Atlantic's director of government relations, told the panel that his company's proposed tax formula had been painstakingly negotiated with local governments in an attempt to create a "level playing field."

"Every service that is offered on a video dial tone network that is also offered by cable TV will be taxed at the exact same rate," Mr. Looney said.

Bell Atlantic's position was supported by David Bliden, executive director of the Maryland Association of Counties. He said the phone company had approached his organization with an offer to work together on how to make up for the expected erosion of franchise revenues that amounted to about $18 million for Maryland counties last year.

"The reason they are there is to expedite their good-faith efforts to enter into this field," he said.

But the Cable Television Association contended that the legislation was an attempt to "end-run local franchising authorities through subtle definitions."

Paul Glist, an attorney for the association, said that more than half of Bell Atlantic's proposed revenue from video dial tone services would be exempt from the tax.